Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 1 of 40
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`QUINN EMANUEL URQUHART & SULLIVAN, LLP
`Adam Wolfson (SBN 262125)
`adamwolfson@quinnemanuel.com
`Joseph Sarles (SBN 254750)
`josephsarles@quinnemanuel.com
`865 S. Figueroa Street, 10th Floor
`Los Angeles, CA 90017
`Telephone: (213) 443-3000
`Facsimile: (213) 443-3100
`
`Stephen A. Swedlow (pro hac vice forthcoming)
`stephenswedlow@quinnemanuel.com
`David A. Nelson (pro hac vice forthcoming)
`davenelson@quinnemanuel.com
`191 N. Wacker Dr., Suite 2700
`Chicago, IL 60606
`Telephone: (312) 705-7400
`Facsimile: (312) 705-7401
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`Attorneys for Plaintiff SaurikIT, LLC
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`SAURIKIT, LLC
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`v.
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`APPLE INC.,
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`Plaintiff,
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`Defendant.
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`CASE NO. _______________
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`COMPLAINT
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`JURY TRIAL DEMANDED
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 2 of 40
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`TABLE OF CONTENTS
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`I.
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`INTRODUCTION ..................................................................................................................1
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`II.
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`THE PARTIES .......................................................................................................................3
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`III.
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`JURISDICTION AND VENUE .............................................................................................4
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`IV.
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`INTRADISTRICT ASSIGNMENT .......................................................................................4
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`V.
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`RELEVANT FACTS .............................................................................................................5
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`A.
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`B.
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`CYDIA—THE INNOVATOR THAT LED APPLE TO CREATE THE
`APP STORE ...............................................................................................................5
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`APPLE MONOPOLIZES THE IOS APP DISTRIBUTION AND IOS APP
`PAYMENT PROCESSING MARKETS ...................................................................8
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`1.
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`2.
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`Apple Belatedly Launches Its Own App Store ..............................................8
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`Apple Has Monopoly Power in the Relevant Markets for iOS App
`Distribution and iOS App Payment Processing ...........................................12
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`3.
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`Apple’s Anticompetitive Conduct and the Antitrust Injury .........................21
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`INTERSTATE TRADE AND COMMERCE ..................................................................................30
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`PRAYER FOR RELIEF ...................................................................................................................37
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`DEMAND FOR JURY TRIAL ........................................................................................................37
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 3 of 40
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`I.
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`INTRODUCTION
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`In today’s world, if you ask an iPhone user what is the “App Store,” they will tell
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`you it is the store that Apple includes on all new iPhones and is the distribution channel through
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`which users locate, download, and pay for applications (“apps”) for their phone. The App Store is
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`a huge business that generates over $50 billion annually, of which Apple generally takes a 30%
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`cut. It is also a source of much controversy because, just as it does in nearly all aspects of its
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`business, Apple has wielded the power the App Store gives it over iOS app distribution ruthlessly,
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`and in a way that has not only drawn substantial outcry from the app developer community, but
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`also deep scrutiny from governments and regulators worldwide.
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`2.
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`What most do not know, however, is that it did not have to be this way and, in fact,
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`is not this way (and never was) on nearly every other electronic device platform. Historically,
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`distribution of apps for a specific operating system (“OS”) occurred in a separate and robustly
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`competitive market. Apple, however, began coercing users to utilize no other iOS app distribution
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`service but the App Store, coupling it closer and closer to the iPhone itself in order to crowd out
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`all competition. But Apple did not come up with this idea initially—it only saw the economic
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`promise that iOS app distribution represented after others, like the Plaintiff here, demonstrated that
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`value with their own iOS app distribution products/services. Faced with this realization, Apple
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`then decided to take that separate market (as well as the additional iOS app payment processing
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`market described herein) for itself.
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`3.
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`Plaintiff SaurikIT, LLC (“SaurikIT” or “Cydia”) was founded by Jay Freeman, a
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`preeminent software engineer. When Apple introduced the iPhone, it failed to address the
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`distribution of iOS apps. Mr. Freeman realized that Apple’s users wanted and needed to expand
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`the iPhone’s stock capabilities, so he developed Cydia. With an intuitive and attractive interface,
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`Cydia was the first comprehensive solution to fill that need and was the App Store before the App
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`Store even existed.
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`4.
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`Cydia became hugely popular by offering a marketplace to find and obtain third
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`party iOS applications that greatly expanded the capabilities of the stock iPhone, including games,
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`productivity applications, and audio/visual applications such as a video recorder (whereas the
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 4 of 40
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`original iPhone only allowed still camera photos). Apple subsequently took many of these early
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`third party applications’ innovations, incorporating them into the iPhone directly or through apps.
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`5.
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`But far worse than simply copying others’ innovations, Apple also recognized that
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`it could reap enormous profits if it cornered this fledgling market for iOS app distribution, because
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`that would give Apple complete power over iOS apps, regardless of the developer. Apple
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`therefore initiated a campaign to eliminate competition for iOS app distribution altogether. That
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`campaign has been successful and continues to this day. Apple did (and continues to do) so by,
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`inter alia, tying the App Store app to iPhone purchases by preinstalling it on all iOS devices and
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`then requiring it as the default method to obtain iOS apps, regardless of user preference for other
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`alternatives; technologically locking down the iPhone to prevent App Store competitors like Cydia
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`from even operating on the device; and imposing contractual terms on users that coerce and
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`prevent them from using App Store competitors. Apple has also mandated that iOS app
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`developers use it as their sole option for app payment processing (such as in-app purchases), thus
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`preventing other competitors, such as Cydia, from offering the same service to those developers.
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`6.
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`Through these and other anticompetitive acts, Apple has wrongfully acquired and
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`maintained monopoly power in the market (or aftermarket) for iOS app distribution, and in the
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`market (or aftermarket) for iOS app payment processing. Apple has frozen Cydia and all other
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`competitors out of both markets, depriving them of the ability to compete with the App Store and
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`to offer developers and consumers better prices, better service, and more choice. This
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`anticompetitive conduct has unsurprisingly generated massive profits and unprecedented market
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`capitalization for Apple, as well as incredible market power.
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`7.
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`But Apple’s anticompetitive conduct has not gone unnoticed. Regulators around
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`the globe are currently investigating its abuses of power over iOS app distribution, iOS app
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`payment processing, and iOS apps themselves. The United States government, for example,
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`recently condemned Apple as a monopolist the likes of which “we last saw in the era of oil barons
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`and railroad tycoons.” According to a recent U.S. House Judiciary Antitrust Subcommittee report,
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`“Apple leverages its control of iOS and the App Store to create and enforce barriers to competition
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`and discriminate against and exclude rivals while preferencing its own offerings.” European
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 5 of 40
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`regulators likewise have “opened formal antitrust investigations to assess whether Apple’s rules
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`for app developers on the distribution of apps via the App Store violate EU competition rules” and
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`are concerned that “Apple obtained a ‘gatekeeper’ role when it comes to the distribution of apps
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`and content to users of Apple’s popular devices.” And that is just the beginning—Apple is under
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`investigation for its anticompetitive conduct in at least seven jurisdictions around the globe for
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`precisely the conduct Cydia challenges here.
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`8.
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`Were it not for Apple’s anticompetitive acquisition and maintenance of an illegal
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`monopoly over iOS app distribution, users today would actually be able to choose how and where
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`to locate and obtain iOS apps, and developers would be able to use the iOS app distributor of their
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`choice. This would have, in turn, forced Apple to compete for such distribution, which basic
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`economics dictates would have carried substantial benefits to consumers and developers alike.
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`But Apple chose a different path and instead illegally squashed all competition for the App Store,
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`even despite efforts, like Cydia’s, to continue to compete in that market up to this day. Apple’s
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`actions have increased prices for developers and consumers, decreased market output in multiple
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`respects, and generally suppressed innovation because Apple simply wanted more money for
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`itself. Such actions are antithetical to fair competition, violate the law, and require action to
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`prevent further harm to the market and consumers. This lawsuit seeks to open the markets for iOS
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`app distribution and iOS app payment processing to those who wish to compete fairly with Apple,
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`and to recover the enormous damages Apple caused.
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`II. THE PARTIES
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`9.
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`Plaintiff Cydia is a California company with its principal place of business in Isla
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`Vista, California. The Cydia application is an app marketplace that seeks to expand the
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`capabilities of the iPhone for users, including by distributing innovative applications, games, and
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`packages. Cydia was developed in 2008 by a programmer named Jay Freeman. At its inception in
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`2008, Cydia was the most successful iOS app distributor, predating the App Store. Apple then
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`escalated the anticompetitive conduct described herein, which forced its later-developed App Store
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`into a dominant position and largely shut Cydia and other competitors out of the iOS app
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`distribution market. Yet, even under these anticompetitive circumstances, Cydia has consistently
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 6 of 40
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`been the second-most successful iOS app distribution channel, demonstrating both the demand for
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`Cydia specifically, and for non-Apple iOS app distribution services generally.
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`10.
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`Defendant Apple is a California corporation with its principal place of business in
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`Cupertino, California. Apple is likely the largest public company in the world. Apple sells
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`hardware, in the form of iPhones, iPads, Watches, and Mac computers, as well as a number of
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`related services. Apple controls and administers iOS as well as the Apple App Store (“App
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`Store”), which includes setting policy for the App Store and contracting with app developers and
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`consumers.
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`III.
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`JURISDICTION AND VENUE
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`11.
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`This Court has subject matter jurisdiction over plaintiff’s federal antitrust claims
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`under the Clayton Antitrust Act, 15 U.S.C. § 26, and 28 U.S.C. §§ 1331 and 1337. The Court has
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`supplemental jurisdiction over plaintiff’s state law claims pursuant to 28 U.S.C. § 1367.
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`12.
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`This Court has personal jurisdiction over Apple because Apple’s headquarters are
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`located in Cupertino, California. Apple has engaged in sufficient minimum contacts with the
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`United States and has purposefully availed itself of the benefits and protections of both United
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`States and California law such that the exercise of jurisdiction over Apple would comport with due
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`process. Apple has also entered into agreements with developers and consumers that require
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`related disputes to be litigated in this District.
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`13.
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` Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) because Apple
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`maintains its principal place of business in the State of California and in this District, and because
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`a substantial part of the events or omissions giving rise to plaintiff’s claims occurred in this
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`District. In the alternative, personal jurisdiction and venue also may be deemed proper under
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`Section 12 of the Clayton Antitrust Act, 15 U.S.C. § 22, because Apple may be found in or
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`transacts business in this District.
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`IV.
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`INTRADISTRICT ASSIGNMENT
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`Pursuant to Civil Local Rule 3-2(c), this antitrust case shall not be assigned to a
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`particular Division of this District, but shall be assigned on a District-wide basis. Cydia notes that
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`related cases Cameron v. Apple Inc., 19-cv-03074-YGR, Epic Games v. Apple Inc., 3:20-cv-
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 7 of 40
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`05640-YGR, and In re Apple iPhone Antitrust Litig., 11-cv-06714-YGR are currently pending in
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`the Oakland Division.
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`V. RELEVANT FACTS
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`15.
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`Apple has injured both Cydia and competition by way of its unlawful behavior in
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`the U.S. market(s) for (1) iOS app distribution, and (2) iOS app payment processing services. As
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`the holder of an improperly-obtained monopoly in these market(s), Apple’s behavior has resulted
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`in exclusionary and anticompetitive policies and contractual arrangements, reduced output and
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`reduced innovation, and supracompetitive prices for app developers and consumers. It has also
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`caused Cydia substantial damages, including up to the present, due to Apple’s continued
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`anticompetitive conduct, which occurs with every new sale of every new iPhone, and with every
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`update to the iOS operating system on existing iPhones.
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`A.
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`CYDIA—AN IOS APP STORE BEFORE THE APP STORE
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`16. When the first iPhone launched, it was not a “smartphone” by today’s definition.1
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`Although it had cutting edge hardware, the first iPhone was extremely limited in its functionality.
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`It came with only a handful of Apple apps, like a web browser and a basic email client.2 There
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`were no third party software applications available, and Apple did not even have any mechanism
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`to allow users to download or install additional applications or features on their devices.3
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`Jay Freeman was one of the first iPhone adopters and immediately recognized its
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`promise to allow users to do far more than Apple originally envisioned. Mr. Freeman is a
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`preeminent software engineer who studied computer science at the University of California, Santa
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`Barbara and has worked in the field ever since. Among other things, he researched static analysis
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`of platforms such as Microsoft’s .NET and Java, which later became the ubiquitous software
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`1 https://www.businessinsider.com/first-phone-anniversary-2016-12.
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`2 https://www.computerworld.com/article/2549128/update--jobs-touts-iphone---appletv-
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`3 https://www.somagnews.com/9-features-of-the-first-iphone/.
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 8 of 40
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`language that is the foundation of the Android operating system. This background uniquely
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`prepared him for his pioneering development of Cydia.
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`Under long-standing technology industry practice—even Apple’s own practice on
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`its Mac computers—after users purchase a computing device, they are free to install whatever
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`applications they desire, regardless of developer or origin. Markets (or aftermarkets) for
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`applications written for a specific OS are well-recognized and exist for nearly every category of
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`computing device sold today. This is because applications written for one OS do not work on a
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`different OS, so are not substitutes for one another, even if they perform equivalent tasks or have
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`similar purposes.
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`19.
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`Since well before Apple introduced the iPhone, and up through today, the majority
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`of software applications have been sold in a robust distribution market involving multiple different
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`types of distribution channels, including traditional brick and mortar stores, online websites, and
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`OEM-provided marketplaces. Participants in these markets compete with each other for the sale
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`of software applications. Thus, as an historical example, consumers were able to purchase disks
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`with Mac software from brick and mortar stores, or could purchase the right to download that
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`same software on the internet from Apple and then download the program directly to their
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`computer. In those earlier days of the internet, Apple competed with other sellers to distribute
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`software for its devices.
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`20. When Apple first introduced the iPhone, it clearly intended to follow that same
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`precedent, as it did not itself provide a mechanism for users to locate and obtain third party
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`applications on their devices. While the economic potential for providing such a marketplace is
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`now obvious in retrospect, Mr. Freeman was among the first to recognize the opportunity and to
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`meet the needs of the market.
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`21. With Cydia, which Mr. Freeman developed and programmed by himself, users
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`suddenly could use that app to locate, obtain, and eventually pay for other desirable applications
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`for their iOS devices. This innovation was revolutionary on the then-fledgling smartphone format
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 9 of 40
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`and, from the outset, demand for the service Cydia provided was massive. One of the most
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`popular early applications, for example, was Cycorder,4 the first video recorder app for the iPhone,
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`which was available well before Apple’s own video recording app.5 Mr. Freeman built Cycorder
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`from scratch along with many other applications, and other third party developers almost
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`immediately began programming their own applications, games, and other features, and offering
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`them for distribution or sale in the Cydia store.6 Cydia not only provided a repository to browse
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`available applications, but it permitted users to add so-called “extensions” or “packages” that
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`made their devices easier to use and more customizable.7 In the years since this additional
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`innovation, Apple has incorporated such “extensions” into its definition of apps and makes many
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`available on the App Store today. For example, applications available via Cydia pioneered the
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`“control center,” predictive keyboards, rich text formatting for email, accessing the camera from
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`the lock screen, and many more features that were later (sometimes years later) incorporated by
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`Apple into iOS or Apple’s own applications.8
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`22.
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`Cydia was a massive undertaking that became increasingly time-consuming and
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`complex as its popularity soared in the months and early years after its introduction. Mr.
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`Freeman’s work to build the initial marketplace was a huge task, particularly due to the almost
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`total lack of programming interface support from Apple in those early days. From scratch, Mr.
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`Freeman built the software necessary for app delivery and an app purchase mechanism, and
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`created curation frameworks and systems for app selection. He also broke new ground with his
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`payment processing mechanisms, integrating the then-largest payment processors in the world,
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`4 https://cydia.saurik.com/info/cycorder/.
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`5 https://www.macworld.com/article/1141031/iphone3gs.html;
`https://www.gsmarena.com/apple_iphone_3g-2424.php.
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`6 https://masonsblogonios.wordpress.com/2011/05/31/cydia-history/.
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`7 https://wccftech.com/top-cydia-tweaks-bbm-plus-nosafarihistory-and-more/.
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`8 https://ios.gadgethacks.com/how-to/60-ios-features-apple-stole-from-jailbreakers-0188093/.
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 10 of 40
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`such as PayPal and Amazon.9 Based on this work, Mr. Freeman built a reputation for incredibly
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`reliable and fair service.
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`23.
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`Although exact estimates vary, Cydia reached roughly 10% of iPhone users at its
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`peak, around 2009, and despite Apple’s introduction of the App Store.10 This meant that tens of
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`5
`
`millions of users sought out Cydia’s service—first, when it pioneered the concept of an app-based
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`6
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`iOS app marketplace on iPhones and, later, as an alternative to the App Store after Apple copied
`
`7
`
`Cydia’s innovations and began imposing the App Store on iPhone users in the ways described
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`8
`
`below.11 Indeed, hundreds of thousands of users have continued to download Cydia in each of its
`
`9
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`iterations over the years, even as Apple has done more and more with each new generation of its
`
`10
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`iOS software and devices (including the latest version) to stamp out competition for iOS app
`
`11
`
`distribution.12 iPhone users have always wanted choice in app distribution, and Cydia, as the
`
`12
`
`original innovator in this space, has always been ready, willing, and able to provide that choice.
`
`B.
`
`APPLE MONOPOLIZES THE IOS APP DISTRIBUTION AND IOS APP
`PAYMENT PROCESSING MARKETS
`
`1.
`
`Apple Belatedly Launches Its Own App Store
`
`24.
`
`Although Cydia—and the many third party developers using Cydia—were far
`
`ahead of Apple early on, Apple opened its own competitive App Store in July 2008.13 As it has
`
`done countless times since with other types of apps, Apple lifted many of the popular aspects of
`
`the Cydia store and incorporated them into the App Store. For example, many of the apps and
`
`
`9 Cydia was one of the largest users of Amazon Flexible Payments. Cydia also integrated
`Alipay services.
`
`10 https://jalopnik.com/even-toyota-is-apples-bitch-5789431 (8-9%);
`http://isource.com/2009/05/27/what-percentage-of-iphones-are-jailbroken-less-than-10-percent/
`(7%).
`
`11 https://www.businessinsider.com/jailbreak-statistics-2013-3.
`
`12 https://www.businessinsider.com/jailbreak-statistics-2013-3.
`
`13 https://www.apple.com/newsroom/2018/07/app-store-turns-
`10/#:~:text=In%2010%20years%2C%20the%20App,travel%20and%20so%20much%20more.
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`13
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`14
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`15
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`16
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`17
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`18
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`19
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`20
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`21
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`22
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`23
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`24
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`25
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`26
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`27
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`28
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`8
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 11 of 40
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`1
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`packages distributed through Cydia were ultimately incorporated by Apple into iOS or its own
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`2
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`apps.14
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`3
`
`25.
`
`But, even with Apple’s introduction of the App Store, there were numerous reasons
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`4
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`that app developers and consumers still preferred Cydia instead. With a smaller market but a
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`5
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`reasonably large customer base, each developer with their app on the Cydia store had a higher
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`6
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`chance of being noticed and gaining popularity (and revenue). Cydia also offered expedited app
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`7
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`approval compared to Apple, the latter of which is famous for the time it takes to approve apps
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`8
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`(often, months) and is notoriously opaque in its decision making process.15 In the years since its
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`9
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`inception, many iOS app developers have faced substantial difficulty getting answers to simple
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`10
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`questions from Apple about their apps, the app submission process, listings on the App Store, and
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`11
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`other similar issues.16
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`12
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`26.
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`Ever since Apple first introduced the App Store, it has preinstalled the App Store
`
`13
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`app on iPhones and made it so that users can neither remove the app nor change their default
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`14
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`preference to any other marketplace, such as Cydia. Moreover, iPhone users that do not want to
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`15
`
`void their warranty can only download iOS apps through the App Store, which Apple exclusively
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`16
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`controls, regardless of whether the given app was made by Apple or a third party developer.
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`17
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`Apple states that it controls which apps are available for download on every one of its Apple iOS
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`18
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`devices.17 As noted, third party developers create many of these apps, but users can also only pay
`
`19
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`for the apps through the App Store, and Apple takes a 30% commission on the vast majority of all
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`20
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`app-related purchases, from download fees to in-app purchases.18 In contrast, Cydia has always
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`21
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`22
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`23
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`24
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`25
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`26
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`27
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`28
`
`
`14 https://ios.gadgethacks.com/how-to/60-ios-features-apple-stole-from-jailbreakers-
`0188093/.
`
`15 https://www.theverge.com/2020/6/17/21293813/apple-app-store-policies-hey-30-percent-
`developers-the-trial-by-franz-kafka.
`
`16 https://appleinsider.com/articles/15/04/23/apple-under-fire-once-again-for-inconsistent-
`app-store-rule-enforcement.
`
`17 https://developer.apple.com/app-store/review/guidelines/.
`
`18 https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf at 98. The
`only exception to this commission is a recently-announced change in Apple’s policy, whereby app
`
`(footnote continued)
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 12 of 40
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`1
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`offered to negotiate rates with its developers and has in fact done so to offer rates lower than 30%
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`2
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`(or even the 15% commission Apple recently announced in response to regulatory scrutiny for
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`3
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`sub-$1 million apps).
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`4
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`27.
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` Apple also uses price controls for all app-related purchases.19 For example,
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`5
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`payments from app buyers go first to Apple. Apple then distributes a portion of the proceeds to
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`6
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`app developers.20 App developers are precluded from direct contact with their customers,
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`7
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`reducing engagement, developers’ ability to provide feedback to customer issues, and denying
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`8
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`developers more information about their customers. In contrast, Cydia does not limit customer
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`9
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`interaction with developers in this way, nor does it require developers to use its payment
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`10
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`processing services; rather, many have chosen to do so throughout the years because of Cydia’s
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`11
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`excellent service.
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`12
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`28.
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`For their products to be sold in the App Store, iOS application developers enter into
`
`13
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`the Apple Developer Agreement, the Apple Developer Program License Agreement, and Schedule
`
`14
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`2 to the License Agreement, among possibly others.
`
`15
`
`29.
`
`An iOS app developer then must receive Apple’s approval for its apps and in-app
`
`16
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`products before Apple will distribute and sell the apps through the App Store.21
`
`17
`
`30.
`
`Developers can monetize their apps in several ways: a “Free Model” that enables
`
`18
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`free apps, increasing likelihood of engagement; a “Freemium Model” that makes the app
`
`19
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`download free, but users are offered optional additional features in-app that require payments; a
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`20
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`“Subscription Model” that enables ongoing monetization through renewable transactions; a “Paid
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`21
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`22
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`23
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`24
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`25
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`26
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`27
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`28
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`
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`developers that make less than $1 million in revenue annually will only have to pay a 15%
`commission. This category of developer, however, only accounts for 5% of Apple’s App Store
`revenue. See https://www.nytimes.com/2020/11/18/technology/apple-app-store-fee.html.
`Furthermore, the 30% commission has been in place for well over a decade, and remains hanging
`over all app developers that grow and become more successful.
`
`19 Id.
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`20 Apple Inc. v. Pepper, 139 S. Ct. 1514, 1519 (2019).
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`21 https://developer.apple.com/app-store/review/guidelines/.
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 13 of 40
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`1
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`Model” that makes the app itself a paid download and offers no additional features; and a
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`2
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`“Paymium Model” that enables paid app downloads and paid in-app content.22
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`3
`
`31.
`
`As discussed in further detail below, the iOS operating system is unique and
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`4
`
`incompatible with other mobile operating systems.23 Similarly, apps written for iOS do not work
`
`5
`
`on other operating systems (such as Android), and vice versa. Once a consumer purchases an
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`6
`
`iPhone, their only choice of apps for that phone are apps written for iOS, and, due to Apple’s
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`7
`
`conduct, the App Store is essentially the only way in which iOS apps and in-app items can be sold
`
`8
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`to iOS device owners.24 Apple insists that buyers of its devices purchase apps and in-app products
`
`9
`
`only through the App Store, or else void their device’s warranty.25 To reach Apple iOS device
`
`10
`
`owners, then, developers have essentially no choice but to sell via the App Store.
`
`11
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`32.
`
`Because of this, the App Store has become a massive commercial success. At its
`
`12
`
`inception, the store included about 500 free and commercial native applications.26 It has since
`
`13
`
`grown exponentially and, by the release of the iPhone 5 and introduction of the iPad mini in 2012,
`
`14
`
`claimed more than 25 billion app downloads.27 By the end of 2014, over 1.4 million apps were
`
`15
`
`available in the App Store in many categories.28 Today, more than two million apps are available
`
`16
`
`in the App Store.29
`
`17
`
`33.
`
`As Mr. Freeman foresaw when he first created Cydia, apps have become an
`
`18
`
`incredibly important part of the smartphone experience and are now an everyday tool in the life of
`
`
`22 https://developer.apple.com/app-store/business-models/.
`
`23 https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf at 334.
`
`24 https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf at 335.
`
`25 Id.
`
`26 https://www.apple.com/newsroom/2018/07/app-store-turns-
`10/#:~:text=In%2010%20years%2C%20the%20App,travel%20and%20so%20much%20more.
`
`27 https://www.apple.com/newsroom/2012/03/05Apples-App-Store-Downloads-Top-25-
`Billion/.
`
`28 https://www.apple.com/tn/newsroom/2015/01/08App-Store-Rings-in-2015-with-New-
`Records/.
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`29 https://www.digitaltrends.com/news/apple-app-store-turns-10/.
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`19
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`20
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`21
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`Case 4:20-cv-08733-HSG Document 1 Filed 12/10/20 Page 14 of 40
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`1
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`people throughout the world. Indeed, apps, and their in-app product purchase options, are one of
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`2
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`the largest growing markets in the electronic commerce industry, with astonishing worldwide
`
`3
`
`growth from less than $10 billion annual revenue in 2011 to an expected $189 billion by the end
`
`4
`
`of this year.
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`5
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`34.
`
`Apple sits atop all of these sales on iOS devices because it has anticompetitively
`
`6
`
`wrested control of what was historically an unconcentrated and competitive type of market (sales
`
`7
`
`and distribution of software applications for a specific OS) and interposed itself as the near sole
`
`8
`
`player in that market for iOS apps. Annually, the App Store generates over $50 billion, of which
`
`9
`
`Apple takes more than $15 billion.
`
`2.
`
`Apple Has Monopoly Power in the Relevant Markets for iOS App
`Distribution and iOS App Payment Processing
`
`35.
`
` Apple possesses monopoly power in the U.S. market (or aftermarket)